Background on Nuclear Energy:
Nuclear energy provides a significant portion of the world’s base load power capacity, along with coal power, gas, and hydro-electricity. While “renewable” energy and conservation receive the lion’s share of the media coverage, in fact they make up a minuscule proportion of our total generation.
In the United States, for various reasons, there has been little or no investment in new base-load energy capacity, other than natural gas, and our existing plants are continuing to age. Since the plants have a long lead-time, if no new plants are started soon, we will have retirements and no reasonably priced options to replace them, which will drive up the total cost of energy and make our economy less competitive.
There are two viewpoints that I see frequently on this topic:
1) “The Greens” who view nuclear plants as a possible solution for greenhouse emissions and less “dirty” than coal, and I will put most of the government and media dreamers in this category
2) “The Engineers” who talk about new plant designs and how efficient they are and how technology can help us resolve this situation, which seems plausible given that most of the technology behind nuclear and coal plants actually in operation today stems from the 60’s and early 70’s
One viewpoint that I don’t see very often is what I will call “the bitter realist”. I am definitely in this camp, based on decades of experience with the utility industry, focused primarily on the financing side, which also requires a fair dose of regulatory experience (since they are closely intertwined). You can see much more detailed posts (50 and counting) on the energy industry in the US here.
Recent Events in Nuclear Power:
One event that didn’t receive the coverage that it deserved is the decision to abandon the Yucca Mountain storage plan in Nevada for spent nuclear fuel. Obama made this decision not to fund Yucca Mountain in the 2010 budget, although this has not been finalized. Over $9 billion has been spent on Yucca Mountain and work has proceeded on this effort since 1987. Utilities have been paying into a Federal fund to contribute to this storage site, and now each individual utility will need to determine how to store their own fuel on their own location indefinitely. There will also likely need to be some resolution to the amounts that the utilities have paid into the fund and whether these contributions will continue.
This plan was the signal monstrosity of the “greens / government” combined with the “engineers”. The site was studied to death but even 2 seconds into it the “bitter realist” could have told you that there was no way that thousands of shipments of nuclear waste were going to be shipped all the way across the USA and dumped into Nevada; this process could be halted anywhere by 1) bitter fighting by the state of Nevada (note that Harry Reid is now a big power in the Democratically controlled Senate, and he is celebrating) 2) lawsuits or even protests along the tracks 3) any sort of snafu (which seems inevitable, considering the logistics) along the way, the same way that the Three Mile Island incident was used to be the death knell of nuclear power in the USA.
So, now effectively we have abandoned any type of central storage (don’t believe the nonsense by the new energy secretary about a new plan; this one took 22 years to die and we haven’t even started thinking of another one) and now each of the utilities effectively need to plan for their own spent storage on site, indefinitely. This will also be something that the protesters can use to try to slow down / stop any new construction (do you want radioactive fuel in your neighborhood FOREVER? – I can see the signs in my head, now).
Another problem is that utilities have to plan for decommissioning their existing sites and pay for it “as they go”, unlike the Federal government, for example (which just issues debt and more debt). The cost of decommissioning is gigantic; you can only imagine the feast of lawyers and regulators that swoop to the site like seagulls at a garbage dump. The Nuclear Regulatory Commission recently cited 18 nuclear power plants to address these funding shortfalls – since they are not able to invest in risky securities, the current low interest rates will also mean that additional cash infusions will be required at some point in the future (although these policies mean that they didn’t lose money in the recent crash, either).
US Government Selects Four Companies for Federal Loan Guarantees:
The US Government recently selected four companies for Federal loan guarantees for new nuclear plant construction. Per the WSJ article titled “US Chooses Four Utilities to Revive Nuclear Industry”:
Seventeen companies applied for $122 billion of federal loan guarantees for 21 proposed reactors. In creating their short list, federal officials sought companies with strong development teams and plans that could be implemented quickly. They also wanted a mix of traditional utilities (Scana and Southern) and newer “merchant” generators (NRG, UniStar) that sell electricity at unregulated prices. Merchant operators have reaped big productivity gains in nuclear power in recent years. Foreign partners that might be able to contribute loans or equity were also considered a plus.
Hmmm…. when I saw this list I was pretty confused.
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